Crystal Ltd is a member of Cemerlang Holding Bhd. The principal activities of Crystal Ltd consist of glass manufacturing and sale of glassware, mainly glass containers to food companies and soft drinks manufacturers. Budgets are prepared by the head office and given to the managers of the various divisions who then have the responsibility of achieving their respective targets. Actual costs are compared against the budgets and the divisional managers are then asked to comment on the budgetary control statement received. Top management assesses managerial performance by comparing actual with budgeted results. A copy of the budgetary' control report for June for the Assembly division is given below. Sales and production (units) Sales Direct material Direct labor Other manufacturing costs Divisional fixed overhead profit Budgeted 5,000 2,000,000 (500,000) (300,000) (600,000) (400,000) 200,000 Actual 5,500 2,150,000 (584,000) (352,000) (616,000) (400,000) 198,000 Variance 500 F 150,000 F 84,000 A 52,000 A 16,000 A 2,000 A The Assembly Division just has a new manager and has very little previous experience of working with budgets but he does have many years' experience as a supervisor in assembly division. Based on that experience he was sure that the division had performed well but the above statement shows that the division has overspent. The manager of the division does not believe that the variances calculated give a fair assessment of his division's performance. He thinks that the budget figures are inappropriate.